fraud, asset tracing & recovery asia
TRANSCRIPT
Fraud, Asset Tracing & Recovery
AsiaRecognition & Enforcement of Foreign
Court Judgments and Foreign Arbitral
Awards in China and Malaysia
Sunil AbrahamPartner
Contents:
I. Law of Arbitration in Malaysia
II. Setting Aside of Awards
III. Post-Award Reference on Question of
Law
IV. Safeguards against Frivolous Challenge
V. Recognition and Enforcement, and
Refusal, of Awards
I. Law of Arbitration in Malaysia
Arbitration Act 1952 (“AA 1952”)
Arbitration Act 2005 (“AA 2005”)
◦ Based on UNCITRAL Model Law 1985 and
the New Zealand Arbitration Act 1996
I. Law of Arbitration in Malaysia
English is the authoritative version of the
AA 2005◦ Total Safe Sdn Bhd v Tenaga Nasional Berhad & Anor
[2009] 1 LNS 420
I. Law of Arbitration in Malaysia
Modes of Challenging an Award
◦ Section 37 Arbitration Act 2005: Application
for setting aside
◦ Section 42 Arbitration Act 2005: Reference on
questions of law
◦ Section 39 Arbitration Act 2005: Grounds for
refusing recognition or enforcement
I. Law of Arbitration in Malaysia
Challenge to Award before
Commencement of Proceedings for
Recognition and Enforcement
◦ Section 37 Arbitration Act 2005: Application
for setting aside
◦ Section 42 Arbitration Act 2005: Reference on
questions of law
◦ Concurrent challenge
I. Law of Arbitration in Malaysia
Challenge to Award during Proceedings
for Recognition and Enforcement
◦ Section 39 Arbitration Act 2005: Grounds for
refusing recognition or enforcement
◦ Active Remedy vs Passive Remedy
II. Setting Aside of Awards
Section 37 AA 2005
◦ Mirrors the grounds for setting aside under
the Article V of the New York Convention and
Section 34 of the UNCITRAL Model Law
1985
II. Setting Aside of Awards
Narrow view of jurisdiction in AA 1952
The Government of India v Cairn Energy India Pty Ltd
& Anor [2011] 6 MLJ 441 (FC):
“Where a specific matter is referred to arbitration for
consideration… no such interference is possible upon the
ground that the decision upon the question of law is an
erroneous one… [I]f the matter is a general reference,
interference may be possible ‘if and when any error
appears on the face of the award.”
II. Setting Aside of Awards
Narrow view of jurisdiction in AA 2005
The Government of India v Cairn Energy India Pty Ltd
& Anor [2014] 9 MLJ 149 (HC):
“[T]he principle which has remained constant, be it under the old
Arbitration Act of 1952 or the new 2005 Act … the fundamental
approach that the courts generally bear when dealing with
challenges of arbitral awards. Not only are courts slow to intervene
even where there is discretion to do so, the courts are cognisant of
the fact that as supervisory courts, there is a more than healthy
respect for party autonomy and party choice. The courts here have
long ascribed to this philosophy practiced in many jurisdictions.”
II. Setting Aside of Awards
Narrow view of jurisdiction
The Government of India v Cairn Energy India Pty Ltd
& Anor [2014] 9 MLJ 149 (HC):
“Court’s powers are not invoked in the field of appellate
jurisdiction. [It] does not scrutinise the merits of the parties’
respective case or responses before the tribunal. The court
must also resist interfering in the decisions of the arbitral
tribunal save where it is prescribed under the Arbitration Act
2005.”
II. Setting Aside of Awards
Narrow view of jurisdiction
Taman Bandar Baru Masai Sdn Bhd v Dindings
Corporations Sdn Bhd [2010] 2 AMR 151: Mere
allegation of grounds is insufficient; proof of
grounds must be provided.
II. Setting Aside of Awards
Section 37(1)(a)(i) AA 2005:
“An award may be set aside by the High Court only if
a party to the arbitration agreement was under any
incapacity.”
II. Setting Aside of Awards
Section 37(1)(a)(ii) AA 2005:
“An award may be set aside by the High Court only if
the arbitration agreement is not valid under the law to
which the parties have subjected it, or, failing any
indication thereon, under the laws of Malaysia.”
II. Setting Aside of Awards
Section 37(1)(a)(iii) AA 2005:
“ An award may be set aside by the High Court only if
the party making the application was not given
proper notice of the appointment of an arbitrator or
of the arbitral proceedings or was otherwise unable to
present that party’s case.”
II. Setting Aside of Awards
Section 37(1)(a)(iv) AA 2005:
“An award may be set aside by the High Court only if
the award deals with dispute not contemplated by or
not falling within the terms of the submission to
arbitration.”
Infineon Technologies (M) Sdn Bhd v Orisoft
Technology Sdn Bhd [2011] 7 MLJ 539: This only
concerns procedural natural justice, not
substantive natural justice.
II. Setting Aside of Awards
Section 37(1)(a)(vi) AA 2005:
“An award may be set aside by the High Court only if
the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement
of the parties, unless such agreement was in conflict
with a provision of this Act from which the parties
cannot derogate, or, failing such agreement, was not in
accordance with this Act.”
II. Setting Aside of Awards
Section 37(1)(a)(vi) AA 2005
Kerajaan Malaysia v Perwira Bintang Holdings Sdn
Bhd [2015] 6 MLJ 126
II. Setting Aside of Awards
Section 37(1)(b)(i) AA 2005:
“ The High Court finds that the subject-matter of the
dispute is not capable of settlement by arbitration
under the laws of Malaysia.”
Aras Jalinan Sdn Bhd v Tipco Asphalt Public Co Ltd
& Ors [2012] 1 MLJ 510: statutory remedy of
winding-up under the Companies Act, 1965, is
not arbitrable.
II. Setting Aside of Awards
Section 37(1)(b)(ii) AA 2005:
“ The High Court finds that the award is in conflict with the
public policy of Malaysia.”
Section 37(2) AA 2005:
“Without limiting the generality of Section 37(1)(b)(ii), an
award is in conflict with the public policy of Malaysia where (a)
the making of the award was induced or affected by fraud or
corruption; or (b) a breach of the rules of natural justice
occurred (i) during the arbitral proceedings; or (ii) in connection
with the making of the award.”
II. Setting Aside of Awards
No cases wherein award was set aside for breach
of public policy
Majlis Amanah Rakyat v Kausar Corporation Sdn Bhd
[2011] 3 AMR 315: Malaysia adopts a narrow view,
consistent with Hong Kong, Singapore and New
Zealand.
◦ Hebei Import & Export Corp v Polytek Engineering Co Ltd
[1999] 2 HKCFAR 111
◦ Aloe Vera of America Inc v Asianic Food (S) Pvt Ltd and
another [2006] 3 SLR(R) 174
◦ Downer Hill Joint Venture v Government of Fiji [2005] 1
NZLR 554
II. Setting Aside of Awards
Formal requirements for challenge
◦ Order 69, rule 5(3) Rules of Court: originating
summons must (a) provide details of the award
challenged; (b) identify part(s) of award being
challenged; and (c) grounds for the challenge.
◦ Order 69, rule 5(4): “The applicant shall file by affidavit,
written evidence on which he intends to rely when he files
his writ, including a copy of the arbitration agreement and
award.
◦ Perembun (M) Sdn Bhd v Binas BMK Sdn Bhd and
another case [2015] 11 MLJ 447
II. Setting Aside of Awards
Section 37(4) AA 2005: “An application for setting
aside may not be made after the expiry of ninety
days from the date on which the party making the
application had received the award or, if a request
has been made to correct or give an interpretation
to the award, or provide an additional award, from
the date on which that request had been disposed
of by the arbitral tribunal.”
II. Setting Aside of Awards
Government Of The Lao People’s Democratic
Republic v Thai-Lao Lignite Co Ltd (“TLL”), A
Thai Company & Anor [2011] 1 LNS 1903
(CA) (“Thai-Lao Lignite”)
◦ Court of Appeal granted an extension of time
for the plaintiff to file its application to set
aside an award on the basis of its inherent
jurisdiction.
◦ Remains an unreported decision to date.
II. Setting Aside of Awards
Section 8 AA 2005:
“No court shall intervene in matters governed
by this Act, except where so provided under this
Act.”
II. Setting Aside of Awards
Decisions departing from Thai-Lao Lignite
on the basis that the decision was
reached without the benefit of Section 8
AA 2005
◦ JHW Reels Sdn Bhd v Syarikat Brocos Shipping
Sdn Bhd [2013] 7 CLJ 249
◦ Kembang Serantau Sdn Bhd v Jeks Engineering
Sdn Bhd [2016] 2 CLJ 427
II. Setting Aside of Awards
JHW Reels Sdn Bhd v Syarikat Brocos Shipping Sdn Bhd
[2013] 7 CLJ 249
“[O]n a proper reading of s. 37(4) the time limit imposed is
mandatory. This view accords with the generally accepted view that
under the Model Law, the time limit is strict and express power must
be given under the law itself before the court can extend time. This
view also accords with the principle of minimal intervention by the
courts of law as strongly underlined in our s. 8 of the Act. Support for
this strict reading can be found within the four corners of s. 37 itself.
II. Setting Aside of Awards
JHW Reels Sdn Bhd v Syarikat Brocos Shipping Sdn Bhd
[2013] 7 CLJ 249
“Unlike art. 34 of the Model Law which provides no exceptions,
our s. 37(5) provides two exceptions:
“(5) Subsection (4) does not apply to an application for setting aside
on the ground that the award was induced or affected by fraud or
corruption.”
Thus, expressio unius est exclusio alterius.”
II. Setting Aside of Awards
JHW Reels Sdn Bhd v Syarikat Brocos Shipping Sdn Bhd
[2013] 7 CLJ 249
“The appearance of the words "may not" in s. 37(4) cannot
reasonably be read as denoting a merely directory requirement. In
the total scheme of our Arbitration Act and bearing in mind the full
provision of s. 37, this will be a case where "may" should be read as
"must" or "shall" to effectuate the legislative intent. To this extent, I
have to say, with due respect to my learned brother judge
in Government of the Lao People's Democratic Republic v. Thai-Lao
Lignite Co Ltd & Anor, I differ in my reading of s. 37(4).”
II. Setting Aside of Awards
Kembang Serantau Sdn Bhd v Jeks Engineering Sdn Bhd
[2016] 2 CLJ 427
“Sometimes, as it is the case here, the sentence construction simply
does not permit the use of the word "shall"; and the word "may" is
then used. This usage does not detract from the basic object or
intention of the provision which is to require mandatory or strict
compliance.”
II. Setting Aside of Awards
Kembang Serantau Sdn Bhd v Jeks Engineering Sdn Bhd
[2016] 2 CLJ 427
“sub-s. 37(4) must be given a strict reading. That being so, it is
irrelevant the length of delay, be it a day or nine months; the
identity of the applicant, a commercial concern or a
government; or even the subject matter; so long as the parties
have agreed to arbitrate. The only exceptions are within sub-s.
37(4) and sub-s. 37(5)”
III. Post-Award Reference on
Questions of Law42. Reference on questions of law
(1) Any party may refer to the High Court any question of
law arising out of an award.
(1A) The High Court shall dismiss a reference made under
subsection (1) unless the question of law substantially
affects the rights of one or more of the parties.
(2) A reference shall be filed within forty-two days of the
publication and receipt of the award, and shall identify the
question of law to be determined and state the grounds
on which the reference is sought.
III. Post-Award Reference on
Questions of Law42. Reference on questions of law
(3) The High Court may order the arbitral tribunal to
state the reasons for its award where the award –
(a) Does not contain the arbitral tribunal's reasons; or
(b) Does not set out the arbitral tribunal's reasons in
sufficient detail.
III. Post-Award Reference on
Questions of Law42. Reference on questions of law
(4) The High Court may, on the determination of a
reference –
(a) Confirm the award;
(b) Vary the award;
(c) Remit the award in whole or in part, together with
the High Court's determination on the question of law to
the arbitral tribunal for reconsideration; or
(d) Set aside the award, in whole or in part.
III. Post-Award Reference on
Questions of Law42. Reference on questions of law
(5) Where the award is varied by the High Court, the
variation shall have effect as part of the arbitral tribunal's
award.
(6) Where the award is remitted in whole or in part for
reconsideration, the arbitral tribunal shall make a fresh
award in respect of the matters remitted within ninety
days of the date of the order for remission or such other
period as the High Court may direct.
III. Post-Award Reference on
Questions of Law42. Reference on questions of law
(7) Where the High Court makes an order under
subsection (3), it may make such further order as it thinks
fit with respect to any additional costs of the arbitration
resulting from that order.
(8) On a reference under subsection (1) the High Court
may –
(a) Order the applicant to provide security for costs;
or
(b) Order that any money payable under the award
shall be brought into the High Court or otherwise
secured pending the determination of the reference.
III. Post-Award Reference on
Questions of Law Relatively unique provision
◦ Not found in Singapore’s International
Arbitration Act and Arbitration Act, nor Hong
Kong’s Arbitration Ordinance.
◦ A similar provision is contained in Section 69
of the English Arbitration Act 1996 (“AA
1996”).
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Timing of reference
Section 42(1) AA 2005: Any party may refer to the High
court any question of law arising out of an award within 42
days of the date the award was notified to the party.
Section 45 AA 1996: Determination of preliminary point of
law; can be made by application to the English High Court
during arbitral proceedings
Section 69 AA 1996: Determination of a point of law arising
out of an award within 28 days from the date of the award
or from the result of any arbitral process of appeal or
review.
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Opt-in/Opt-out
Section 3(2) and (3) AA 2005: Opt-out for domestic
arbitration, opt-in for international arbitration.
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Opt-in/Opt-out
Section 45(1) and 68(1) AA 1996: Opt-out.
“Unless otherwise agreed by the parties, a party to arbitral
proceedings may (upon notice to the other parties and to the
tribunal) [determine any question of law arising in the course of the
proceedings which the court is satisfied substantially affects the
rights of one or more of the parties] or [appeal to the court on a
question of law arising out of an award made in the proceedings].
An agreement to dispense with reasons for the tribunal’s award shall
be considered an agreement to exclude the court’s jurisdiction under
this section.
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Conditions to commence
appeal/reference proceedings
Section 42 AA 2005: No prior procedural conditions.
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Conditions to commence
appeal/reference proceedings
Section 45(2)(a) AA 1996: must be made with the
agreement of all other parties to the proceedings; or
Section 45(2)(b) AA 1996: made with the permission of
the tribunal and the court is satisfied that (i) the
determination of the question is likely to produce
substantial savings in costs, and (ii) that the application
was made without delay.
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Conditions to commence
appeal/reference proceedings
Section 69(2) AA 1996: (a) must be made with the
agreement of all other parties to the proceedings; or (b)
with the leave of the court.
Section 70(2) AA 1996: must first exhaust any available
process of appeal or review, and any available recourse
to correct
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Conditions for permission/leave to
appeal
Section 69(3) AA 1996: 4 conditions:
◦ Determination of question will substantially affect the
rights of one or more of the parties
◦ Question is one which the tribunal was asked to
determine
III. Post-Award Reference on
Questions of Law Comparison between English and Malaysian
provisions: Conditions for permission/leave to
appeal
Section 69(3) AA 1996: 4 conditions:
◦ Based on the findings of fact in the award, the
decision of the tribunal on the question is obviously
wrong, or the question is of general public
importance and the decision of the tribunal is at least
open to serious doubt, and
◦ Despite the agreement of the parties to resolve the
matter by arbitration, it is just and proper in all the
circumstances to determine the question.
III. Post-Award Reference on
Questions of Law Restrictive approach◦ Section 42 AA 2005 appears to provide an appeal in
all but name. Since the AA 2005 omits any
requirement to obtain leave of the court, it makes it
all the more necessary for a strict approach to be
adopted: Sundra Rajoo and WSW Davidson, Arbitration
Act 2005.
◦ Courts to take a limited view of its jurisdiction under
Section 42: Majlis Amanah Rakyat v Kausar Corporation
Sdn Bhd [2011] 3 AMR 315 (HC)
III. Post-Award Reference on
Questions of Law Restrictive approach◦ The arbitral tribunal remains the sole determiners of
questions of fact and evidence: Gold and Resource
Developments (NZ) Ltd v Doug Hood Ltd [2003] 3
NZLR 318.
◦ Jurisdiction under Section 42 AA 2005 should be
exercised only in clear and exceptional cases: Lembaga
Kemajuan Ikan Malaysia v RJ Construction Sdn Bhd
[2013] 8 CLH 655 (HC).
III. Post-Award Reference on
Questions of Law Restrictive approach◦ The Court cannot consider the questions of law in a
reference in the same manner as an appeal: Awangku
Dewa PGN Momin & Ors v Superintendent of Lands and
Surveys, Limbang Division [2015] 3 CLJ 1
III. Post-Award Reference on
Questions of Law Question of law arising out of award◦ Question of law must arise from the award, not the
arbitration proceedings generally: Majlis Amanah
Rakyat v Kausar Corporation Sdn Bhd [2011] 3 AMR 315
(HC)
III. Post-Award Reference on
Questions of Law Question of law arising out of award◦ Question of law and its supporting grounds must be
identified with sufficient precision: Tune Insurance
Malaysia Bhd & Anor v Messrs K Sila Dass & Partners
[2015] 9 CLJ 93 (HC)
◦ Question of law must be a legitimate question of law,
not a question of fact “dressed up” as a question of
law: Chain Cycle Sdn Bhd v Kerajaan Malaysia [2016] 1
MLJ 681; Magna Prima Construction Sdn Bhd v Bina BMK
Sdn Bhd and another case [2015] 11 MLJ 841
III. Post-Award Reference on
Questions of Law Question of law arising out of award◦ Where the findings of facts and the applications of
legal principles by the arbitrator is wrong (questions
of mixed fact and law), the court should not intervene
unless the decision is perverse: Lembaga Kemajuan
Ikan Malaysia v RJ Construction Sdn Bhd [2013] 8 CLJ
655 (HC).
III. Post-Award Reference on
Questions of Law Substantially affect rights of a party◦ Burden of proving that the question of law will
substantially affect a party’s rights is on the party
making the reference: Kerajaan Malaysia v Perwira
Bintang Holdings Sdn Bhd [2015] 1 CLJ 617
◦ The party referring the question of law must provide
affidavit evidence showing precisely what right has
been affected, how that right has been substantially
affected, : Magna Prima Construction Sdn Bhd v Mina
BMK Sdn Bhd and another case [2014] 11 MLJ 841
(HC)
III. Post-Award Reference on
Questions of Law Substantially affect rights of a party◦ Where the determination of the question(s) of law
will not have a substantial effect on the rights of
parties, the court must dismiss the reference:
Exceljade Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2014] 1
AMR 253
III. Post-Award Reference on
Questions of Law Awangku Dewa PGN Momin & Ors v
Superintendent of Lands and Surveys,
Limbang Division [2015] 3 CLJ 1
◦ Drafting Questions of Law
◦ Approach of the High Court to Questions of
Law
III. Post-Award Reference on
Questions of Law Drafting Questions of Law
“In our judgment the eight 'questions of law' referred to the
High Court are not genuine questions of law but rather an
attempt to appeal against the decision of the arbitrator. If it
had been a genuine move to refer questions of law to the
High Court, then, the questions of law would have been
concisely and clearly framed; and the questions posed need
not have to be as many as eight.”
III. Post-Award Reference on
Questions of Law Drafting Questions of Law
“Instead, what we find in the originating summons, are not
concisely and clearly framed questions of law, but rather
criticisms of the decisions of the learned arbitrator drafted in
the manner that one normally finds in the 'grounds' of a
memorandum (or petition) of appeal (note the repeated
usage of the phrase 'erred in law' in every 'question' that
was posed). In other words, we find the 'reference' to be an
attempt to appeal against the award (which the Act does
not allow) but disguised as a 'reference on questions of law'
under s. 42.”
III. Post-Award Reference on
Questions of Law Approach of the Court
“A High Court in considering a s. 42 reference must not take
lightly the duty to critically examine the questions posed by the
applicant and to ensure that the question referred to the court is
purely a question of law and not a question of mixed law and
fact, and is clearly and concisely framed, before embarking to
entertain the application and to answer the question posed. There
should be no complication, confusion or duplicity in framing the
questions. Instead, there should be simplicity and clarity. The legal
burden is on the applicant to ensure that these requirements are
strictly complied with.”
III. Post-Award Reference on
Questions of Law Approach of the Court
“A High Court in dealing with a s. 42 reference must summarily
dismiss the application, without even attempting to answer the
'question of law' posed to the court, if the question is, in the first
place, not properly and intelligibly framed; or where it is clear to
the court that there is a disguised attempt by the applicant to
appeal against the decision of the arbitral tribunal. In other words,
a court of law must always be vigilant against any attempt by a
party to abuse the s. 42 procedure as provided for by the Act and
to utilise the provision as a backdoor avenue for appealing
against the decision of an arbitral tribunal.”
III. Post-Award Reference on
Questions of Law
Proper law of the contract is foreign law
Issue: Can a reference on a question of foreign
law be brought under Section 42 AA 2005?
In Malaysia, foreign law is a question of fact: Mak
Sik Kwong v Minister of Home Affairs, Malaysia (No
2) [1975] 2 MLJ 175
III. Post-Award Reference on
Questions of Law
Proper law of the contract is foreign law
Egmatra AG v Marco Trading Corp [1999] 1 Lloyd’s
Rep 862: English High Court refused to grant
leave to appeal the arbitrator’s award under
Section 69 AA 1996 because the parties’
contract was subject to Swiss law.
III. Post-Award Reference on
Questions of Law
Proper law of the contract is foreign law
Hussman (Europe) Ltd v Al Ammen Development
and Trade Co [2000] 2 Lloyd’s Rep 83:
“If there is no suggestion by the parties that there is an
issue under the applicable system of law which is different
from the law of England and Wales, or the tribunal does
not itself raise a specific issue, then the tribunal is free to
decide the matter on the basis of the presumption that
the applicable system of law is the same as the law of
England and Wales.”
III. Post-Award Reference on
Questions of Law
Section 42(3) AA 2005: “The High Court may
order the arbitral tribunal to state the reasons for
its award where the award–
(a) does not contain the arbitral tribunal’s reasons;
or
(b) does not set out the arbitral tribunal’s reasons in
sufficient detail.”
III. Post-Award Reference on
Questions of Law
Section 42(4) AA 2005: “The High Court may, on
the determination of a reference–
(a) confirm the award;
(b) vary the award;
(c) Remit the award in whole or in part, together
with the High Court’s determination on the question
of law to the arbitral tribunal for reconsideration; or
(d) Set aside the award, in whole or in part.”
III. Post-Award Reference on
Questions of Law
Section 42(5) AA 2005: “Where the award is
varied by the High Court, the variation shall have
effect as part of the arbitral tribunal’s award.”
Section 42(6) AA 2005: “Where the award is
remitted in whole or in part for reconsideration, the
arbitral tribunal shall make a fresh award in respect
of the matters remitted within ninety days of the
date of the order for remission or such other period
as the High Court may direct.
III. Post-Award Reference on
Questions of Law
Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd and
another appeal [2017] MLJU 326
◦ Concurrent application to set aside under Section 37
AA 2005 and refer questions of law under Section 42.
◦ Set aside and remitted part of the award to the
arbitrator for reconsideration.
◦ Extended the time frame under Section 42(6) AA
2005 to 120 days.
◦ Section 37 application became academic.
III. Post-Award Reference on
Questions of Law
Majlis Ugama Islam dan Adat Resam Melayu
Pahang v Far East Holdings Bhd and anor (Federal
Court Civil Appeal No: 02(f)-21-04/2016(W))
◦ Federal Court is hearing arguments on whether a
liberal approach should be taken for Section 42 AA
2005, i.e. that a question of law is anything which
arises out of the award which substantially affects the
rights of the parties, or to maintain conservative
approach taken thus far.
◦ Still pending decision.
IV. Safeguards Against Challenges
Section 37(7) AA 2005:
“Where an application is made to set aside an award,
the High Court may order that any money made
payable by the awards shall be brought into the High
Court or otherwise secured pending the determination
of the application.”
IV. Safeguards Against Challenges
Section 42(8) AA 2005:
“On a reference under subsection (1) the High Court
may–
(a) order the applicant to provide security for costs;
or
(b) order that any money payable under the award
shall be brought into the High Court or otherwise
secured pending the determination of the
reference.”
IV. Safeguards Against Challenges
Considered only in a few cases
◦ Mechanalysis Sdn Bhd (in liquidation) v Appraisal Property
Management Sdn Bhd [2011] 11 MLJ 566 (HC):
RM45,000 awarded under Section 42(8)(b).
◦ Petronas Penapisan (Melaka) Sdn Bhd v Ahmani Sdn Bhd
[2016] 2 MLJ 697 (CA): Court noted that application
should have been the first thing done by the award-
creditor.
IV. Safeguards Against Challenges
Considered only in a few cases
◦ Zenbay Sdn Bhd v Yong Choo Kui Shipyard Sdn Bhd
[2015] 10 CLJ 924: Court refused the application
under Section 42(8)(b) on the basis that award-
creditor did not attempt to enforce the award. There
was therefore no evidence that the award-creditor’s
right to enforce the award would be affected.
V. Recognition and Enforcement,
and Refusal, of Awards
Section 38(1) AA 2005:
“On an application in writing to the High Court, an award
made in respect of an arbitration where the seat of
arbitration is in Malaysia o an award from a foreign State
shall, subject to this section and section 39 be recognised
as binding and be enforced by entry as a judgment in
terms of the award or by action.”
V. Recognition and Enforcement,
and Refusal, of Awards
Section 38(2) AA 2005: Application must
exhibit the following:
◦ Duly authenticated original award or a duly
certified copy; and
◦ Duly authenticated original arbitration
agreement or a duly certified copy.
V. Recognition and Enforcement,
and Refusal, of Awards
Section 38(3) AA 2005:
“ Where the award or arbitration agreement is in a
language other than the national language or the English
Language, the applicant shall supply a duly certified
translation of the award or agreement in the English
Language.”
V. Recognition and Enforcement,
and Refusal, of Awards
Section 39(2) AA 2005:“If an application for setting aside or suspension of an award
has been made to the High Court on the grounds referred to in
subparagraph (1)(a)(vii), the High Court may, if it considers it
proper, adjourn its decision and may also, on the application of
the party claiming recognition or enforcement of the award,
order the other party to provide appropriate security.”
V. Recognition and Enforcement,
and Refusal, of Awards
Section 39(2) AA 2005:“If an application for setting aside or suspension of an award
has been made to the High Court on the grounds referred to in
subparagraph (1)(a)(vii), the High Court may, if it considers it
proper, adjourn its decision and may also, on the application of
the party claiming recognition or enforcement of the award,
order the other party to provide appropriate security.”
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
(1)(a)(i) A party to the arbitration
agreement was under any incapacity.
(1)(a)(i) A party to the arbitration
agreement was under any incapacity.
(1)(a)(ii) The arbitration agreement is
not valid under the law to which the
parties have subjected it, or, failing any
indication thereon, under the laws of
Malaysia.
(1)(a)(ii) The arbitration agreement is
not valid under the law to which the
parties have subjected it, or, failing any
indication thereon, under the laws of
the State where the award was made.
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
(1)(a)(iii) The party making the
application was not given proper
notice of the appointment of an
arbitrator or of the arbitral
proceedings or was otherwise unable
to present that party’s case.
(1)(a)(iii) The party making the
application was not given proper
notice of the appointment of an
arbitrator or of the arbitral
proceedings or was otherwise unable
to present that party’s case.
(1)(a)(iv) The award deals with dispute
not contemplated by or not falling
within the terms of the submission to
arbitration.
(1)(a)(iv) The award deals with dispute
not contemplated by or not falling
within the terms of the submission to
arbitration.
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
(1)(a)(v) Subject to subsection (3), the
award contains decisions on matters
beyond the scope of the submission
to arbitration.
(1)(a)(v) Subject to subsection (3), the
award contains decisions on matters
beyond the scope of the submission
to arbitration.
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
(1)(a)(vi) The composition of the
arbitral tribunal or the arbitral
procedure was not in accordance with
the agreement of the parties, unless
such agreement was in conflict with a
provision of this Act from which the
parties cannot derogate, or, failing
such agreement, was not in
accordance with this Act.
(1)(a)(vi) The composition of the
arbitral tribunal or the arbitral
procedure was not in accordance with
the agreement of the parties, unless
such agreement was in conflict with a
provision of this Act from which the
parties cannot derogate, or, failing
such agreement, was not in
accordance with this Act.
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
N/A (1)(a)(vii) The award has not yet
become binding on the parties or has
been set aside or suspended by a
court of the country in which, or
under the law of which, that award
was made.
V. Recognition and Enforcement,
and Refusal, of Awards
Direct overlap of Sections 37 and 39
Section 37 AA 2005 Section 39 AA 2005
(2)(b)(i) The High Court finds that the
subject-matter of the dispute is not
capable of settlement by arbitration
under the laws of Malaysia.
(2)(b)(i) The High Court finds that the
subject-matter of the dispute is not
capable of settlement by arbitration
under the laws of Malaysia.
(2)(b)(ii) The award is in conflict with
the public policy of Malaysia.
(2)(b)(ii) The award is in conflict with
the public policy of Malaysia.
V. Recognition and Enforcement,
and Refusal, of Awards
Choice of remedies
◦ Active remedy: award-debtor makes an
application to set aside the award
◦ Passive remedy: award-debtor resists
enforcement by award-creditor
Issue: Should courts allow an award-
debtor to rely on a passive remedy where
it fails to pursue an active remedy?
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Singapore proceedings)
◦ During the arbitration, Lippo chose not to
challenge the Tribunal’s decision that it had
jurisdiction by way of an application pursuant
to Article 16(3) of the UNCITRAL Model Law
to the court of the seat (Singapore). Instead
Lippo waited until the Astro entities took
steps to enforce the awards and raised its
challenge at that stage.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo Arbitration
◦ PT First Media TBK v Astro Nusantara
International [2014] 1 SLR 372 (“Astro v Lippo
(Singapore)”)
◦ Astro Nusantara International BV v PT First
Media TBK HCCT 45/2010 (“Astro v Lippo
(Hong Kong)”)
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Singapore)
◦ During the arbitration, Lippo chose not to
challenge the Tribunal’s decision that it had
jurisdiction by way of an application pursuant
to Article 16(3) of the UNCITRAL Model Law
to the court of the seat (Singapore). Instead
Lippo waited until the Astro entities took
steps to enforce the awards and raised its
challenge at that stage.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Singapore)
◦ The Singapore Court of Appeal held that both
an active and passive remedy was available in
Singapore, and failure to exercise its active
remedy to set aside an award did not
prejudice the availability of the passive remedy
of challenging enforcement proceedings.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Singapore)
◦ The Singapore Court of Appeal held that
active and passive remedies apply to both
foreign and domestic awards.
◦ Therefore, grounds available for resisting
enforcement are equally available to a party
resisting enforcement of awards.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Singapore)◦ The Singapore Court of Appeal held that a failure to
challenge a tribunal’s preliminary ruling on jurisdiction
under Article 16(3) of the Model Law cannot prevent
the availability of passive remedies.
◦ Therefore, the fact that Lippo had not raised a
timeous challenge to the preliminary award on
jurisdiction did not prevent it from exercising its
passive remedy to challenge the enforcement of the
awards.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Hong Kong)
◦ Astro obtained judgment on the award in
Hong Kong in November 2010 and in July
2011 obtained a garnishee order to attach
funds in the amount of US $44m due to First
Media from its parent company. Lippo only
took steps to set aside the judgment in Hong
Kong in early 2012, well after the time limit
for doing so had expired.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Hong Kong)
◦ Those proceedings were stayed to await the
outcome of the decision in Singapore referred
to above. Once the Singapore judgment was
handed down, the Hong Kong Court of First
Instance had to address the question of
enforceability in Hong Kong. The Court first
declined to extend the 14 day deadline for
challenging the enforcement decision.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Hong Kong)
◦ HKCFI found that First Media had acted in
bad faith by not challenging the Tribunal’s
joinder decision by way of setting aside
proceedings, instead waiting until the
enforcement stage to mount its challenge.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Hong Kong)
◦ The Hong Kong Court of Appeals clarified that
the requirement of good faith is breached where
there appears to be an active attempt to mislead
the counterparty.
◦ Recognised that a party’s failure to challenge
jurisdiction before both the arbitral tribunal and a
supervisory court during arbitral proceedings
could be construed as a breach of good faith.
V. Recognition and Enforcement,
and Refusal, of Awards
Astro v Lippo (Hong Kong)
◦ The Hong Kong Court of Appeals found good
faith as being complementary with the
principle of choice of remedies.
◦ Therefore, where a party fails to pursue an
active remedy in bad faith, recourse to passive
remedies may be denied.
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 1952
◦ State Government of Sarawak v Chin Hwa
Engineering Development Co [1995] 4 CLJ 1
(SC): “A party may, in certain circumstances, avail
himself of a passive remedy. This means that he
does not take the initiative to attack an award
but simply waits and only resists when the
opponent seeks to enforce the award.”
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 1952
◦ State Government of Sarawak v Chin Hwa
Engineering Development Co [1995] 4 CLJ 1
(SC): “Passive remedy would be available where
the award is so defective in form or substance
that it is incapable of enforcement, and secondly,
where the whole or part of the award is
ineffective on the ground that the relief granted
lies outside the jurisdiction of the arbitrator.”
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 1952
◦ Bauer (M) Sdn Bhd v Daewoo Corp [1999] 4 CLJ
665 (CA): “mere participation in proceedings before
an arbitrator does not cure any jurisdictional defect.
Accordingly, a party who appears with or without
protest and takes part in proceedings before an
arbitrator is not precluded from later challenging the
award of such arbitrator on the grounds of lack of
jurisdiction.”
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 1952
◦ Bauer (M) Sdn Bhd v Daewoo Corp [1999] 4 CLJ
665 (CA) “mere participation in proceedings before
an arbitrator does not cure any jurisdictional defect.
Accordingly, a party who appears with or without
protest and takes part in proceedings before an
arbitrator is not precluded from later challenging the
award of such arbitrator on the grounds of lack of
jurisdiction.”
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 2005.
Unreported cases suggest no passive
remedy where active remedy not
pursued.
◦ Bauer (M) Sdn Bhd v Embassy Court Sdn Bhd
[2010] 1 LNS 1260 (HC)
◦ Alami Vegetable Oil Products Sdn Bhd v Hafeez
Iqbal Oil & Ghee Industries (Pvt) Ltd [2016] 7
CLJ 19 (CA)
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 2005.
◦ Bauer (M) Sdn Bhd v Embassy Court Sdn Bhd
[2010] 1 LNS 1260
Appeal was filed to the Court of Appeal, and the
Astro-Lippo decisions were cited for the Court’s
consideration.
Court of Appeal had sight of the Astro-Lippo
decisions, but could not make a finding as parties
reached an agreement to resolve the matter out of
court.
V. Recognition and Enforcement,
and Refusal, of Awards
Malaysian position under AA 2005.
◦ Alami Vegetable Oil Products Sdn Bhd v Hafeez
Iqbal Oil & Ghee Industries (Pvt) Ltd [2016] 7
CLJ 19 (CA)
Appeal dismissed – No formal application was made
by the Appellant under Section 39 AA 2005 in
resisting enforcement proceedings under Section 38
AA 2005
V. Recognition and Enforcement,
and Refusal, of Awards
AlamiVegetable Oil Products Sdn Bhd v Hafeez Iqbal
Oil & Ghee Industries (Pvt) Ltd (Federal Court Civil
Application No. 08-572-10/2014):
3 Questions allowed to the Federal Court.
V. Recognition and Enforcement,
and Refusal, of Awards
1. Whether or not the Applicant, being part of a
group of persons/entities upon whom an
international arbitration award had been made
against prior to 1st July 2011 would be allowed
to challenge the international arbitration award
at the recognition or enforcement stage, i.e.
when an application was made pursuant to
section 38 AA 2005?
V. Recognition and Enforcement,
and Refusal, of Awards
2. Whether under the circumstances of this case, the
Applicant, being part of a group of persons/entities
upon whom an international arbitration award had
been made against prior to 1st July 2011 could avail
itself of a passive remedy as recognised in the Federal
Court decision in State Government of Sarawak v Chin
Hwa Engineering Development Co [1995] 3 MLJ 237,
meaning that did not have to take the initiative to
attack an award, but could simply wait until an
application was made to recognise or enforce the
award and resist the application then?
V. Recognition and Enforcement,
and Refusal, of Awards
3. Could the circumstances of the present case
constitute an additional situation upon which a
party in the same position as the Applicant
could avail itself of the passive remedy in order
to meet the ends of justice?
V. Recognition and Enforcement,
and Refusal, of Awards
AlamiVegetable Oil Products Sdn Bhd v Hafeez Iqbal
Oil & Ghee Industries (Pvt) Ltd (Federal Court Civil
Appeal No. 02-79-10/2015):
Appeal was allowed. Remitted to the High Court
for retrial before a different Judge.
V. Recognition and Enforcement,
and Refusal, of Awards
Lessons
◦ Fork-in-the-road once enforcement
proceedings begin.
◦ Award-debtor must resist enforcement in
that jurisdiction within the time allowed, or
risk losing the right to enforcement.
V. Recognition and Enforcement,
and Refusal, of Awards
Section 39(3) AA 2005:“Where the decision on matters submitted to arbitration can
be separated from those not so submitted, only that part of the
award which contains decisions on matters submitted to
arbitration may be recognized and enforced.”
Fraud, Asset Tracing & Recovery
AsiaRecognition & Enforcement of Foreign
Court Judgments and Foreign Arbitral
Awards in China and Malaysia
Sunil AbrahamPartner